City's cash reserves soar raising questions on property tax policy

During a recent government meeting, city officials discussed the significant increase in the city's fund balance over the past few years, raising questions about the absence of a property tax during a time of financial growth. The fund balance rose from approximately $14.5 million in 2021 to nearly $26 million by December 2023, prompting inquiries about the rationale behind not imposing a property tax when the city had a lower cash balance.

One official highlighted that while the city currently holds around $25.9 million, a substantial portion—$15 million—belongs to the Economic Development Corporation (ECDC) and is not accessible for city services. Additionally, there are other restricted funds, including $1 million earmarked for specific purposes and hotel occupancy tax funds, which further limit the city's financial flexibility.

The discussion also touched on the city's financial management policy, which mandates that 25% of the operating budget, estimated at around $7 to $8 million, must be reserved from the general fund. This policy aims to ensure fiscal responsibility, even as the city navigates its growing fund balance.

The meeting underscored the complexities of municipal finance, particularly the balance between maintaining a healthy fund balance and addressing community needs through taxation and service funding. As the city continues to evaluate its financial strategies, the implications of these discussions will likely influence future budgetary decisions and tax policies.